Class Action Against Tpi Expands To Retail Investors

ATTENTION: Chiefs of Staff, business reporters

MEDIA RELEASE

Maurice Blackburn and IMF expand potential class action against Transpacific Industries Group Limited

Leading shareholder class action law firm Maurice Blackburn, with funding from IMF (Australia) Ltd, will expand a potential class action against waste management company, Transpacific Industries Group Limited (TPI), on the back of the Federal Government's 4 May announcement that funded class actions will no longer be considered managed investment schemes.

Maurice Blackburn NSW Principal, Rebecca Gilsenan together with IMF announced today that the proposed claim against TPI will be brought on behalf of retail investors as well as professional investors. She also said that the claim will extend to those TPI shareholders who bought shares in the company over a longer period than previously proposed. The claim period is now for those who bought shares in TPI between 29 August 2007 and 16 February 2009.

"There is a good claim for shareholders against TPI for damages caused by misleading conduct and breaches of the company's continuous disclosure obligations,"said Ms Gilsenan.

Over the period of 2005-2008, Brisbane-based TPI grew exponentially by its acquisition of (or merger with) a number of Australian and New Zealand waste management businesses. TPI's key message to the market during this period was that the company would deliver sustainable, increased future earnings and profit through organic growth and growth through acquisition.

In August 2007 TPI provided earnings guidance for the 2008 financial year (FY08) of $535m to $545m Earnings Before Interest Tax Depreciation and Amortisation (EBITDA) and net profit after tax (NPAT) of $170m to $180m. In February 2008 TPI increased its earnings guidance for FY08 to $545m to $560m EBITDA and profit guidance to $175m to $180m NPAT. In August 2008 TPI delivered the FY08 results which largely achieved these forecasts.

In August to November 2008 TPI forecast double digit EBITDA growth for FY09. At the AGM on 6 November 2008, TPI confirmed previous forecasts, stated that the business was "near recession proof" and there was no need to raise capital and stated that impairment of acquired assets would be unlikely.

In stark contrast, three months later on 16 February 2009, TPI announced that:
(a) its financial performance for FY09 was expected to be adversely affected by weaker commodity prices and foreign exchange rates;

(b) there would be a $46m write-down in the value of its investments in listed securities in the first half of 2009; and

(c) the company's capital structure was being reviewed and the company was in discussions with potential cornerstone investors.

By the close of trade on 16 February 2009, over $300m had been wiped from the company's value, after a share price fall from $2.90 to $1.80. The company then went into a five month trading halt from 17 February 2009 to 20 July 2009.

On 27 February 2009, during the trading halt, TPI released further unwelcome news for investors including:

(a) a further $69.3m loss from hedging instruments;

(b) a net loss for 1H09 of $52.6m;

(c) that TPI was in breach of its banking covenants as at 31 December 2008 such that all its debt facilities were current;

(d) that there was a net current asset deficiency of $2,057m; and

(e) that its auditors had qualified its accounts to state that there was material uncertainty as to whether TPI would continue as a going concern.

On 20 July 2009, when trading resumed in TPI's shares, its share price declined by a further 30% from its closing price on 16 February 2009 of $1.80 to $1.26.

Ms Gilsenan said:

"It was only in July 2009, through the Ernst & Young due diligence on TPI, on behalf of Warburg Pincus, that the market became aware that TPI had included $48m of irregular items in the FY08 EBITDA, thereby providing a misleading impression of the company's ongoing profitability.

TPI was making robust predictions of growth and profit and claiming that the company was "near recession proof" throughout 2008 in the midst of the global financial crisis. The reality was quite different and this was belatedly disclosed to the market between February 2009 and July 2009, causing substantial losses to shareholders."

"Australian listed companies are required to make timely disclosure to the market of information that could materially affect their share price. We believe that TPI has failed in its responsibility to provide this information to the market," said Ms Gilsenan.

Shareholders who purchased TPI shares between 29 August 2007 and 16 February 2009 and wish to join this action can contact IMF on 1800 016 464 www.imf.com.au

Media inquiries:
Maurice Blackburn,
Amanda Tattam on
0413 997 467
[email protected]

SOURCE: Maurice Blackburn